Why You Need A Second Financial Opinion

It is not at all uncommon to seek a second medical opinion, especially for a serious health issue. Most people are glad they did because, according to the Mayo Clinic, 90 percent came away with a different diagnosis. For health issues, a second opinion can provide a more refined and complete diagnosis, which often leads to more appropriate care. At the very least, the other 10 percent were able to confirm their initial diagnosis, which gave them more confidence in their doctor. Either way, the second opinion was worth the time and effort.

How Much Confidence Do You Have in Your Financial Diagnosis?

Although there is no similar data to support the value of a second opinion for financial advice, it is no stretch to say that the stakes are similarly high. After all, it is your financial life; and misdiagnosis or improper treatment could be devastating. While everyone would like to have complete confidence in their financial advisor, there will always be an element of doubt. You can gauge your own confidence level by asking yourself if you fully agree with the following statements.

I have a comprehensive, written plan

Without a comprehensive plan, it is not easy to know where you are headed, much less, whether you are on track to meeting your goals. If you do have a plan, it is essential to have it reviewed and updated regularly. Why not use it as an opportunity to get a second opinion?

My plan is fully integrated, coordinating all aspects of my financial situation.

Your financial life is like a puzzle. All the pieces must fit precisely together to ensure your plan is optimized to address all your needs and concerns. That requires a multi-disciplinary approach by experts in the fields of insurance, tax planning, estate planning, and investments.

I am confident that the risk level of my portfolio matches my investment profile

Your portfolio strategy should be based on a sound diagnosis of your objectives and risk-return profile. A second opinion might reveal whether you are taking the right amount of risk to achieve your targeted returns.

I am confident I understand whether the advice I am receiving is 'fiduciary' or 'suitability' advice

Understanding the difference between a fiduciary standard and a suitability standard of advice is important to know whether the advice you are receiving is in your best interest. If your advisor is a fiduciary by law, you know the advice you are receiving is unbiased and conflict-free. Otherwise, suitability advice may be driven by other interests.

If you found yourself in just mild disagreement or uncertainty with any of the statements, you could benefit from a second opinion. The good news is that most advisors offer a free second opinion review. However, it is essential to limit your search to the type of advisor you can trust to provide objective and conflict-free advice.

How to Ensure You Receive the Most Value from a Second Opinion

Narrow your search for a second opinion advisor by considering only those advisors who have earned the Certified Financial Planner ™ (CFP®) designation. CFP® advisors must meet rigorous educational and ethical standards, and they are qualified by their knowledge and experience in financial planning. You can narrow the search even further by considering those CFP®s who are also Registered Investment Advisors (RIAs). RIAs are bound by law to serve their clients under a strict fiduciary standard.

Once you find the right financial advisor for your second opinion, here is what you should expect:

• A complete evaluation of your short and long-term goals and where you are in relation to them.
• A thorough analysis of your investment strategy to determine if your asset allocation accurately targets your risk-return profile and whether your expected returns will achieve your objectives
• Clarification of your entire financial picture, including how the different aspects of your plan are working to meeting your needs, including your risk management, taxes, and cash flow
• Specific recommendations for making any necessary adjustments or reassurance that the current path you are on is the best one to help you reach your goal

The outcome of a financial second opinion can only be a positive one. You will either correct or refine your original diagnosis so you can make the necessary course adjustments; or your initial diagnosis will be confirmed. Either way, you will come away with much more clarity and confidence.